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What to look for in aninvestor, and where to find them

What to look for in aninvestor, and where to find them

You’ve developed your business and you’re ready to grow. It’s time to speak to an investor. But with so many different types of investors out there, what makes the ideal candidate? And where do you find them?

As you start out on your investment journey, you’ll realise every investor you meet is different. Along with the different types of finance to choose from, you have to consider why you want an investor to get involved in your business and make sure you find one that suits your needs. It’s important to meet a number of investors (as tempting as it may be to jump at the first offer).

Firstly, however, you need to determine what you’re looking for. It’s not just money that an investor can offer you. It’s experience, passion, an understanding of your sector, guidance and even friendship.

It’s up to you to decide what support your business needs beyond the financial benefits. Being clear on what you want from an investor early will stand you in good stead further down the line

“[Investors] are bringing the money, but they also give support. There needs to be a level of chemistry there. You need to get on. The key thing to remember is that some investors – like Angel Investors – are not going to exit for 7+ years. It can be a long relationship.”

Rod BeerStrategic Relations Director @ UKBAA

Meanwhile, on the other side of the equation, a potential investor will be looking to you to tell them what makes your business stand out. They’ll be looking for a story, a vision that they can buy into.

Where to find your investor (and what next)

Once you’ve thought about what you want in an investor, it’s time to go out there and find them. But where do you start? To help we’ve pulled together some tips, as well as guidance from investors themselves.

1. Talk

Seek out similar businesses to your own and find out what worked for them. If what they’re telling you sounds good, don’t be afraid to ask for an introduction. At this stage it’s about talking to as many people as possible.

“One of the big recommendations for an entrepreneur is to try to talk to other people and persuade them of your viability. Either they will invest, or they might know someone who will.”

Jenny ToothAngel Investor and CEO @ UKBAA

2. Network

Put the word out to your professional network. Attend industry-related events. As with so many of these things, it’s about making contacts and expanding your pool of potential investors.

“The more you get out there, the more you learn. You’ll need to get used to having conversations with investors. You’ve got to train yourself, if you haven’t got the skills already then learn them. There’s no real magic to it, it’s graft.”

David Mott Chair of the Venture Capital Committee @ BVCA

3. Your peers

Talk to your peers and don’t restrict yourself to like-for-like business owners. Just because a business isn’t identical to yours doesn’t mean you can’t learn from their experience when it comes to finance and investment.

“The ability to share challenges with other businesses, who are not necessarily operating in the same sector, but are going through a similar business environment, shouldn’t be underestimated.”

Umerah Akram Head of ELITE UK and International

4. Prepare

Once you’ve lined up meetings and you’re ready to get out there, ask yourself some important questions. Think about your ambitions for growth.

How much do you need to make that happen? Investors won’t necessarily be looking for a detailed business plan, but they will expect you to have a clear idea of your business and where it’s going.

“Forward planning is so important. You need to be very honest and upfront to keep the relationship strong. You need to say how much you need, what you need it for, as well as how much you’ll need in the future.”

Jenny Tooth Angel Investor and CEO @ UKBAA

If you’re looking for guidance on how to evaluate your business and prepare for a meeting with potential investors, our checklist, ‘Are you ready for finance?’ could be a good place to start. Then, you can look forward to taking this exciting step into investment.

We are a UK government owned business development bank increasing the supply of finance available to growing smaller and medium sized businesses. The British Business Bank is not regulated or authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).